Judge signs restraining order for sweepstakes stakeholders

A court order filed Monday in Davidson County enjoins authorities from enforcing a sweepstakes ban against a software licensor that provides products to businesses across North Carolina.

BY NASH DUNNThe Dispatch

A court order filed Monday in Davidson County enjoins authorities from enforcing a sweepstakes ban against a software licensor that provides products to businesses across North Carolina.The restraining order temporarily bars state officials, county sheriffs and local law enforcement from warning, threatening, citing or removing any products from sweepstakes businesses that use software licensed by International Internet Technologies, LLC (IIT).Earlier this month, Davidson County sheriff’s deputies charged operators of the Hickory Tree Business Center in Midway with misdemeanor possession of electronic machines and other devices for sweepstakes. The citation, one of at least five others issued throughout the county, followed a recent North Carolina Supreme Court decision that upheld a 2010 state law banning the controversial gaming machines.Attorneys for the business center and IIT, which licenses software to the Internet Café, filed a complaint and a motion for a temporary restraining order Jan. 22, arguing that recent changes to the licensor’s software made it compliant.The filings targeted Gov. Pat McCrory, Secretary of Crime Control and Public Safety Kiernan Shanahan and Davidson County Sheriff David Grice.A hearing on the motion is scheduled for Monday. Until then, the signed temporary restraining order from Superior Court Judge Robert Johnson only applies to sweepstakes businesses that use IIT software, according to court records.“This order offers no protection as to any other company offering any other sweepstakes system,” according to the order.Few sweepstakes citations have been issued across the state since the ban went into effect Jan. 3. District Attorney Garry Frank said five citations have been issued in his district, all by the Davidson County Sheriff’s Office.Frank said he dismissed a misdemeanor charge against the operators of the Hickory Tree Business Center based on evidentiary concerns. The other four charges are still pending, he said.Winston-Salem attorneys Michael A. Grace and Christopher R. Clifton, who represent the plaintiffs, alleged that IIT, which licenses computer software to retail businesses in North Carolina, modified its sweepstakes software system to meet provisions of the law.N.C. General Statute 14-306.4, otherwise known as House Bill 80, mandates it is unlawful for anyone to operate electronic machines to conduct or promote a sweepstakes through the use of an entertaining display, including an entry process and the reveal of a prize.“In previous versions of the IIT system sweepstakes, customers would choose a game display prior to learning whether their sweepstakes entry was a winning entry,” according to the motion for a temporary restraining order. “The results of the sweepstakes entry were revealed to the customer through a simulation of a game.”However, modifications to IIT software were such that the process of submitting and revealing the sweepstakes entries at the computer terminal are separate from — and happens prior to — any game play on the network, the attorneys argued.Most sweepstakes businesses that use different versions of the “pre-reveal” software have chosen to remain open in Lexington, Thomasville and parts of Davidson County. Frank said he advised law enforcement to proceed, slowly.“Due to the complexities and history of the issue, I’ve advised them to go slow and make sure we have a consensus opinion to the state of the law right now,” Frank said. “If, and when, we do charge someone, we have to make sure we have the evidence to proceed forward.”Noelle Talley, public information officer for the N.C. Department of Justice, said the state had received a copy of the order and pleadings, and state attorneys were reviewing them.

Nash Dunn can be reached at 249-3981, ext. 227, or at nash.dunn@the-dispatch.com.

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